Opendoor builds $ 9 billion debt war chest to buy US homes

(Bloomberg) – Opendoor Technologies Inc. is adding billions of dollars in borrowing capacity as it rushes to buy and sell more homes.

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The company, the largest of an emerging tech-powered home pinball group called iBuyers, has entered into a modified mezzanine debt facility with a $ 3 billion limit, according to an Oct.4 filing. The move, combined with other recent transactions, allows the company to borrow up to $ 9 billion through non-recourse asset-backed facilities.

Read more: Zillow Home Rollover Bonds Pull Wall Street Deeper Into Housing

Opendoor’s main business is buying a house, repairing it and putting it back on the market. Access to short-term debt is a crucial ingredient in the process, which also depends on home rating algorithms and home improvement contractor networks.

He uses senior debt to pay 80% to 90% of a given home, and mezzanine debt for the balance, according to an August file. The company’s new $ 3 billion mezzanine facility enables it to acquire more than 40,000 homes, based on an average home price of $ 350,000. The company would need more senior debt to reach this number.

Read more: Opendoor Seeks $ 2 Billion Credit Facility to Boost Home Buyers

Opendoor’s main competitor, Zillow Group Inc., has also taken on Wall Street for debt, seeking more than $ 1 billion in two unrated bond offerings.

Opendoor rose 1.5% to $ 19.28 at 1:37 p.m. Tuesday. The stock had slipped more than 16% this year until Monday’s close. Zillow shares have also fallen so far in 2021. After nearly tripling last year, the stock has fallen by more than 35%.

(Updates with stock performance at the bottom of the story.)

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About Joaquin Robertson

Joaquin Robertson

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